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Practical Income Manual 2021.

Concept and scope of application of the direct estimation method

Regulations: Articles 16.2 a) and 30.1 Law Personal Income Tax

Direct estimation constitutes the general method for determining the amount of the different components of the personal income tax tax base, which obviously include those derived from the exercise of economic activities. This method is based on the declarations submitted by the taxpayer, as well as on the data recorded in the accounting books and records that the taxpayer is required to keep, verified by the Tax Administration.

When it comes to determining the performance of economic activities in Personal Income Tax the direct estimation method admits two modalities : normal and simplified.

  1. Scope of application of normal mode
  2. Scope of application of the simplified modality
  3. Waiver or exclusion of the simplified modality
  4. Incompatibility between methods and modalities for determining net performance
  5. Entities in the income allocation system
  6. Examples